Victoria’s independent economic regulator today released a request for comment paper, seeking feedback and input from stakeholders to inform its approach to setting electricity default offer prices for 2024-25.
The Victorian Default Offer is a simple electricity price set independently by the Essential Services Commission. It provides Victorian households and small businesses a reasonably priced electricity option, which is based on the efficient costs to retailers of supplying electricity.
The Victorian Default Offer is the “standing offer” that applies when a customer has not entered into a contract with an energy retailer. As of June 2023, around 382,000 households and 58,000 small businesses were on standing offers. This represents around 14 per cent of households and 20 per cent of small businesses.
Executive Director of Pricing and Regulation, Marcus Crudden, said the commission is seeking stakeholder feedback on how it assesses the efficient costs of providing electricity to Victorian households and small businesses.
“The Victorian Default Offer is an important safeguard for customers. It serves not only as a benchmark for customers to compare market offers against, but also to reassure customers who do not engage with the energy market that they are still paying a reasonable price for their electricity.”
“Our review will involve an updated assessment of the different costs that make up electricity bills, including wholesale electricity costs, and the cost of getting energy to peoples’ homes and small businesses,” he said.
Mr Crudden said that while the Victorian Default Offer provides a helpful benchmark and safeguard for many, Victorian consumers should still shop around.
“Most customers are on market contracts, not standing offers. While the Victorian Default Offer plays a key role as a benchmark price, market contracts often have prices below the Victorian Default Offer. Customers can use the free and independent website Victorian Energy Compare to easily compare market contracts with the Victorian Default Offer."
